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DECREE

AMENDING AND SUPPLEMENTING A NUMBER OF ARTICLES OF THE GOVERNMENT'S DECREE NO. 198/ 2004/ND-CP OF DECEMBER 3, 2004, ON THE COLLECTION OF LAND USE LEVY

THE GOVERNMENT

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the November 26, 2003 Land Law;

Pursuant to the November 29, 2005 Investment Law;

Pursuant to the November 29, 2006 Law on Tax Administration;

Pursuant to the June 29, 2009 Law Amending and Supplementing a Number of Articles of Laws Concerning Capital Construction Investment;

At the proposal of the Minister of Finance,

DECREES:

Article 1. Scope of amendment and supplementation

This Decree provides for the amendments and supplementations to a number of articles of the Government's Decree No. 198/2004/ND-CP of December 3, 2004, on the collection of land use levy (below referred to as Decree No. 198/ 2004/ND-CP).

Article 2. To amend and supplement a number of articles of Decree No. 198/2004/ND-CP as follows:

1. To supplement Clause 2 of, and add Clause 5 to, Article 4 on bases for calculation of land use levy, as follows:

"2. Land prices for calculation of land use levy:

a) In case land is allocated by the State with the collection of land use levy not through land-use right auctions, the land price for calculation of land use levy is the price based on land use purposes at the time of issuance of a land allocation decision by a competent state agency; in case the time of land handover does not coincide with the time stated in the land allocation decision, the land price for calculation of land use levy is the price based on land use purposes at the time of land handover;

b) In case a land user is granted by a competent state agency a certificate of rights to use land or to own houses or other assets attached to land (below referred to as land use right certificates) for a land area which is currently in use or permitted for change of use purposes, the land price for calculation of land use levy is the price based on land use purposes at the time of granting land use right certificates or land use purposes already changed at the time of declaration and submission of a complete and valid dossier of application for the grant of land use right certificates or change of land use purposes to a competent state agency;

c) Land prices for calculation of land use levy specified at Points a and b of this Clause are the prices prescribed by provincial-level People's Committees. In case land prices prescribed by provincial-level People's Committees do not match actual market land use right transfer prices under normal conditions, provincial-level People's Committees shall base on actual market prices to decide on specific land prices to suit reality. Particularly, in case a household or individual is granted a residential land use right certificate for a land area which is currently in use or is permitted for change of use purposes and such land area is within residential land use limits, the land price for calculation of land use levy is the price prescribed by a provincial-level People's Committee at the time of declaration and submission of a complete and valid dossier of application for the grant of land use rights certificates or change of land use purposes to a competent state agency.

5. In case a multi-story construction work attached to land is allocated by the State to several users, land use levy shall be distributed for each story and to each user.

The Ministry of Finance shall guide the distribution of land use levy under this Clause."

2. To amend Clause 4, Article 5 on collection of land use levy upon land allocation by the State, as follows:

"4. In case a person who is allocated land by the State with the collection of land use levy pays in advance compensations or supports for resettlement and funds for the organization of ground clearance work under an approved plan, the paid amount will be subtracted from the payable land use levy under such plan, but the subtraction level must not exceed the payable land use levy amount.

The remainder of compensations and supports for resettlement and funds for organization of the ground clearance work under the approved plan which is not yet subtracted from the payable land use levy amount (if any) will be calculated as the project's investment capital."

3. To amend Clause 3, Article 7 on collection of land use levy upon the conversion from land lease to land allocation with the collection of land use levy, as follows:

"3. In case a land user, who has previously paid in advance compensations or supports for resettlement and funds for the organization of ground clearance work under an approved plan, is permitted to shift from land lease to land allocation with the collection of land use levy, but the amount to be subtracted from the payable land rent determined by a competent state agency has not yet been completely subtracted, this amount shall be further subtracted from the payable land use levy; the remainder (if any) will be calculated as the project's investment capital.

In cases a land user has paid in advance land rents, the amount of land rents paid in advance for the remaining duration (if any) will be subtracted from the payable land use levy amount."

4. To add the following Clauses 4 and 5 to Article 8 on collection of land use levy upon the grant of land use right certificates to current land users:

"4. In case an organization was allocated land without collection of land use levy or leased land by the State before October 15, 1993, but later distributed (allocated) illegally such land to households and individuals that are its officials and employees for the residential purpose, when it is granted land use rights certificates, the land use levy shall be collected at a level equal to 40% of land prices prescribed by provincial-level People's Committees as for cases of selling state-owned houses to current tenants under the Government's Decree No. 61)CP of July 5, 1994, for areas within the residential land allocation limits, or 100% of land prices decided by provincial-level People's Committees in conformity with actual land use right transfer prices in the market at the time of grant of land use right certificates, for areas in excess of residential land allocation limits.

5. For households and individuals that are currently using land acquired through encroachment for the purpose of building houses, if their land areas are suitable to plans on residential areas and conditions for grant of land use right certificates are fully met as prescribed by law, when they are granted land use right certificates, land use levy shall be collected as follows:

a) For those who started using such land before October 15,1993, land use levy shall be collected at a level equal to 50% of land prices prescribed by provincial-level People's Committees, for areas within new residential land allocation limits, or 100% of land prices decided by provincial-level People's Committees in conformity with actual land use right transfer prices in the market at the time of grant of land use right certificates, for areas in excess of residential land allocation limits;

b) For those who started using such land at a time between October 15, 1993, and July 1, 2004, land use levy shall be collected at a level equal to 100% of land prices prescribed by provincial-level People's Committees, for areas within new residential land allocation limits, or 100% of land prices decided by provincial-level People's Committees in conformity with actual land use right transfer prices in the market at the time of grant of land use right certificates, for areas in excess of residential land allocation limits."

5. To amend Clause 5 and add Clause 7 to Article 11 on principles for land use levy exemption or reduction, as follows:

"5. Land use levy exemption or reduction when the State allocates land or permits change of land use purposes under Articles 12 or 13 of this Decree and Article 1 of the Government's Decree No. 44)2008)ND-CP of April 9, 2008, may only be effected directly for eligible subjects on the payable land use levy amount as prescribed in Articles 5 thru 10 of this Decree.

In case a person who is eligible for land use levy exemption or reduction as prescribed by law is permitted by competent authorities to transfer his)her project to another under law, the transferee will also be entitled to land use exemption or reduction on the condition that, after being transferred, such land is also used for purposes eligible for land use levy incentives. After being transferred, if such land is used for purposes ineligible for land use levy incentives, land use levy must be paid.

In case land users who are eligible for land use levy incentives wish to pay land use levy, they shall perform financial obligations related to land as for cases ineligible for land use levy.

7. Land use levy exemption or reduction for persons being social policy beneficiaries and persons with meritorious services to the revolution prescribed in Articles 12 and 13 of this Decree also applies in case these entities are allocated residential land or sold resettlement houses by the State."

6. To amend Clause 3 of, and add Clauses 8 and 9 to, Article 12 on land use levy exemption, as follows:

"3. For land allocated for construction of students' dormitories; land for construction of houses for displaced people due to natural disasters; land for construction of houses of ethnic minority people in areas facing exceptionally difficult socio-economic conditions; land for construction of houses for workers in industrial parks, export-processing zones and economic zones; and land for construction of houses for sale (for lump-sum or installment payment), lease or lease-purchase to low-income earners in urban centers.

8. To exempt land use levy within residential land limits upon first-time grant of land use right certificates to land converted from non­residential to residential purposes due to division of ethnic minority or poor households into smaller households in exceptional difficulty-stricken communes in areas inhabited by ethnic minority people and mountainous areas specified in the list of exceptional difficulty-stricken communes promulgated by the Prime Minister.

9. To exempt land use levy for land areas allocated for use as hydropower reservoir beds."

7. To amend Clause 2, Article 13 on land use levy reduction as follows:

"2. To reduce 50% of land use levy for land within residential land limits for ethnic minority or poor households in geographical areas other than those specified in Clause 8, Article 12 of this Decree when they are allocated land by competent state agencies as prescribed by the land law or have their land use rights recognized (or being granted land use right certificates) for the first time for land which is currently in use or is permitted to be converted from non­residential to residential purposes. The identification of poor households complies with regulations of the Ministry of Labor, War Invalids and Social Affairs."

8. To add the following Clauses 4 and 5 to Article 15 on time limits for payment of land use levy and other amounts:

"4. In case households and individuals that are permitted to change land use purposes or are granted land use right certificates and must pay land use levy under Article 6 or 8 of this Decree and households and individuals that are allocated resettlement land by the State but cannot afford to pay land use levy may have unpaid levy amounts recorded as "land use levy debts" in their land use right certificates if they so wish and file written applications, enclosed with dossiers of application for grant of land use right certificates, dossiers of application for change of land use purposes or dossiers of application for allocation of resettlement land. Land users shall pay indebted land use levy amounts at the land price at the time of granting their land use right certificates. They may pay these debts within 5 years on an amortization basis. Past this 5-year time limit, if land users still fail to fully pay the indebted land use levy amounts, they shall pay land use levy at the land price at the time of debt payment.

Those that have their land use levy amounts recorded as land use levy debts before March 1, 2011, but have not yet fully paid their debts may apply the debt payment provisions of this Decree. Land users may pay the indebted land use levy at the land price at the time of granting their land use right certificates within 5 years from March 1, 2011. Past this 5-year time limit, if land users still fail to fully pay the indebted land use levy, they shall pay land use levy at the land price prescribed by provincial-level People's Committees at the time of debt payment.

5. The Ministry of Finance shall assume the prime responsibility for, and coordinate with the Ministry of Natural Resources and Environment in, guiding the order and procedures for recording and paying land use levy debts under Clause 4 of this Article."

9. To amend Clause 1 of Article 18 on sanctioning, as follows:

"1. Land users who delay the payment of land use levy into the state budget shall be subject to a fine calculated on the payable land use levy amount; the imposition of fines for late payment of land use levy complies with the Law on Tax Administration and guiding documents."

Article 3. Handling of some matters at the effective time of this Decree

1. In case investors paid in advance compensations and supports for resettlement and funds for the organization of ground clearance work under approved plans according to policies on compensation, support and resettlement upon land recovery by the State applicable before October 1, 2009, the compensation and support amount shall be subtracted from the payable land use levy, but the subtraction level must not exceed the payable land use levy.

In case investors paid in advance compensations and supports for resettlement and funds for the organization of ground clearance work under approved plans according to the Government's Decree No. 69/2009/ND-CP of August 13, 2009, the advanced amount shall be subtracted into the payable land use levy under Article 15 of the Government's Decree No. 69/2009/ND-CP of August 13, 2009.

2. Cases in which land allocation decisions have been issued by competent state agencies under the land law but by March 1, 2011, land use levy has not yet been fully paid shall be handled as follows:

a) In case the payable land use levy amount has been determined and notified by competent state agencies in accordance with laws applicable at the time of determining and notifying the payable land use levy amount, land users shall pay land use levy into the state budget at the notified level and be subject to a fine for late payment according to law;

b) In case the payable land use levy amount has been determined and notified by competent state agencies in contravention of laws applicable at the time of determining and notifying the payable land use levy amount, provincial-level People's Committees shall base themselves on local practical situations to direct the re-determination of the payable land use levy amount in accordance with law. The amount determined to be further paid (if any) shall be notified to investors for payment into the state budget and no fine for late payment shall be imposed on this amount for the period before the payable land use levy amount is re-determined. Before the payable land use levy amount is re-determined, investors shall pay land use levy as determined and notified by competent state agencies. If they have not yet fully paid this amount, they shall pay the deficit amount and be fined for late payment as for the cases prescribed at Point a, Clause 2 of this Article.

In case competent state agencies have notified the payable land us levy amount and investors have fully paid this amount into the state budget for 5 years or more, the payable land use levy amount shall not be re-determined.

c) Cases in which competent state agencies have not yet issued notices on payment of land use levy and land users have not yet paid or have only paid part of land use levy into the state budget but reasons for late payment cannot be identified shall be handled as follows:

The land use levy amount temporarily paid into the state budget shall be converted into land areas for which land use levy has been paid (financial obligations have been fulfilled) at the time of land handover.

For the remaining areas, land use levy must be paid according to policies and land prices applicable at the time of land handover but may be cleared against the amount of compensations and supports for resettlement paid in advance according to the law on compensation, support and resettlement applicable at the time of land allocation. At the same time, a fine for late payment shall be imposed on the land use levy amount to be further paid into the state budget for the period from the time of land handover till the time of issuance of notices on payment of land use levy into the state budget at a percentage of fines for late performance of financial obligations prescribed by law (in each period).

d) In case land has not yet been handed over but functional agencies have notified the payable land use levy amount and investors have remitted money into the state budget, this amount shall be considered as temporarily paid and handled according to Point b, Clause 2 of this Article.

3. For housing projects, new urban center projects and projects on industrial parks' infrastructure, the time of determining land prices and collecting and paying land use levy shall comply with the Government's Resolution No. 33/2008/ND-CP of December 31, 2008.

Article 4. Implementation provisions

1. This Decree takes effect on March 1, 2011.

2. The following provisions are annulled:

a) Clause 2, Article 8 of the Government's Decree No. 198/2004/ND-CP of December 3, 2004;

b) Article 5 of the Government's Decree No. 84/2007/ND-CP of May 25, 2007.

Article 5. Organization of implementation

The Ministry of Finance shall guide the implementation of this Decree.

Ministers, heads of ministerial-level agencies, heads of government-attached agencies and chairpersons of provincial-level People's Committees shall implement this Decree.